The software bear market has bled into other pockets of the technology realm, and some stocks now trade at a rare discount.
It’s been hard to find a good deal in the stock market lately. Ever since big tech hyperscalers like Microsoft, Meta Platforms, Amazon, Alphabet, Tesla, and Apple announced they would be spending nearly $700 billion on capital expenditures this year, artificial intelligence (AI) stocks have been seeing some epic selling pressure.
Smart investors are looking closely at the macro themes, though. Ongoing sell-offs throughout the technology landscape are primarily hitting software stocks the hardest. With AI infrastructure spend on the rise, growth can be found in the companies positioned to absorb hyperscale budget spend.
Let’s dig into two AI chip stocks that look like great long-term buys as the AI infrastructure revolution accelerates.
Image source: Getty Images.
Broadcom
On the surface, $700 billion worth of AI capex probably makes you think Nvidia and Advanced Micro Devices are the AI semiconductor stocks to buy hand over fist right now. After all, Nvidia’s Blackwell and upcoming Rubin GPUs have been so popular that the company’s backlog has been touted by management to be in the hundreds of billions of dollars.
Some developers are investing in ways to migrate away from the industry incumbents, though. Both Meta and Alphabet are designing their own custom AI accelerators — known as MTIA and TPU chips. Broadcom (AVGO 0.46%) is helping both companies with their custom silicon solutions.
Another way Broadcom benefits from rising data center build-outs is through its networking operation. When hyperscalers procure chips from Nvidia and AMD, they are purchasing GPUs by the hundreds of thousands.
Today’s Change
(-0.46%) $-1.55
Current Price
$332.44
Key Data Points
Market Cap
$1.6T
Day’s Range
$329.58 – $340.11
52wk Range
$138.10 – $414.61
Volume
717K
Avg Vol
31M
Gross Margin
64.71%
Dividend Yield
0.72%
In order to link these clusters together, you must connect the GPUs with routing and switching gear. Broadcom’s Tomahawk and Jericho chips are the gold standard when it comes to stitching AI fabrics together and keeping GPU clusters processing data at ultra-low latencies.
The theme here is that Broadcom is quietly positioned to benefit alongside its counterparts as increasing amounts of AI capex are allocated toward critical networking equipment and move beyond a singular focus on buying GPUs.
Micron Technology
For nearly three years, generative AI has been a primary function of large language models (LLMs) — chatbots like OpenAI’s ChatGPT, Alphabet’s Gemini, X’s Grok, or Anthropic’s Claude. Rising AI infrastructure isn’t about building more chatbots, though.
Hyperscalers have their eyes on far more sophisticated applications — autonomous vehicles, agentic AI, and humanoid robots, just to name a few. These use cases require more intense development than building a basic LLM.
For this reason, AI workloads are now scaling at an unprecedented rate as big tech companies continuously train and inference their next-generation models. In essence, compute capacity is no longer the primary pain point for bringing new AI-powered products to life. GPU clusters must be complemented by memory and storage solutions. Micron Technology (MU +2.36%) specializes in high-bandwidth memory (HBM) chips.
Today’s Change
(2.36%) $9.85
Current Price
$427.20
Key Data Points
Market Cap
$470B
Day’s Range
$415.00 – $430.58
52wk Range
$61.54 – $455.50
Volume
1.5M
Avg Vol
33M
Gross Margin
45.53%
Dividend Yield
0.11%
To drive home how critical HBM has become, consider that prices for dynamic random access memory (DRAM) and NAND chips are expected to rise by up to 60% and 38%, respectively, just during the first quarter. Given Micron has already sold out of its HBM inventory for 2026, the company should be in a position to command enormous pricing power as memory walls become the new bottleneck along the AI chip value chain.
Broadcom and Micron are the new pick-and-shovel AI infrastructure stocks
In the anatomy of an AI data center, GPU architectures designed by Nvidia and AMD can be thought of as the brain for the server rack. Specialty chips from Broadcom and Micron represent both the nervous system and memory that help the brain function.
Hyperscalers are no longer focused on procuring GPUs in droves for experimental work. Rather, rising AI infrastructure signals that big tech now has its eyes on efficiency and scale. As developmental bottlenecks move from capacity constraints to data movement and storage, both Broadcom and Micron are in a lucrative position to capture incremental capex spend.
Data by YCharts.
Against this backdrop, I see Broadcom and Micron as the new pick-and-shovel players fueling the AI infrastructure revolution over the next several years. Smart investors may consider doubling down on both stocks right now as their respective valuations look reasonable amid the ongoing tech sell-off.
Adam Spatacco has positions in Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Tesla. The Motley Fool has positions in and recommends Advanced Micro Devices, Alphabet, Amazon, Apple, Meta Platforms, Micron Technology, Microsoft, Nvidia, and Tesla. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.
